How Biden Would Corral Billions in Overseas Profits

President Joe Biden is proposing to unwind many of the corporate tax changes in President Donald Trump’s 2017 tax law. Companies could end up collectively paying hundreds of billions of dollars more in taxes in the coming years. Key to the Biden proposal is the imposition of a new global minimum tax to address a longstanding issue -- the ability of multinational corporations to greatly reduce what they owe the U.S. government.

Biden would put a 21% levy on the profits U.S. companies earn in each country where they operate abroad. That compares with as little as 10.5% to 13% that companies pay on their foreign earnings now, but is less than the 28% rate Biden wants to apply to domestic profits. Significantly, Biden’s plan would block companies from blending the rate they pay across all foreign jurisdictions -- meaning they would pay the full 21% even on profits in low-tax countries. The plan would also eliminate a rule that allows U.S. companies to pay zero taxes on the first 10% of earnings when they locate investments in foreign countries.